September 2024
Brazil: Based on Brazil's 2015 GDP forecast, cement production and civil construction in Brazil are expected to remain flat in 2015 for the first time in more than a decade.
GDP rose by 7.53% in 2010, but growth dropped in the following four years to 2.73%, 1.03%, 2.49% and 0.1%, according to BNamericas data. The amount of cement produced has followed the same trend. While in 2010 production was up by 14.2%, it rose by 7.55%, 8.19%, 2% and only 1.5% in the following four years, ending 2014 at 71.2Mt. Finally, civil construction revenue jumped by 33.5% in 2010, but the industry posted increases of 12.6%, 12.9%, 7.60% and 8.48% over the next four years. The last drop in Brazil's civil construction industry occurred in 2002. As GDP estimates are pointing toward a 1.7% contraction for 2015, cement production and civil construction are unlikely to grow in 2015 if they continue to follow Brazil's overall economy.
Tanzania’s cement producers call for level playing field 07 August 2015
Tanzania: Local cement makers have said that they are now facing collapse due to the continued influx of cheap imported products in an already saturated market.
The Chairman of the Tanzania Chapter of East African Cement Producers Association (EACPA), Reinhardt Swart, said that their situation was being made worse because they were competing with cheap imports at a time when their margins are squeezed by overcapacity in the market. "I am not asking for protection. I'm not asking the government to ban imports. I am asking for the government to create a level playing field," said Swart. He commented they were operating in a difficult environment with risks of job losses to adjust to the situation.
Swart welcomed the entry of new players in the cement market, saying they would stimulate development in the industry but cautioned that their preferential treatment such as tax breaks was not helpful to the country as it contribute to create unleveled playing field against the local industries. "If you allow new players for integrated cement plants and give tax breaks and you allow imports in an over capacity market, that is not fair. There is a risk that cement producers will suffer job losses," said Swart.
Swart said that Tanzania's cement producers support the government campaign to help local industries grow by using local coal, gypsum and other materials, but that the government was not reciprocating the gesture. "If you force us to use local coal, that increase in cost must be calculated in monetary terms and charged on imports as well. The same applies to royalties. If you force us to grow another industry at our cost, then you must either give us subsidies or charge the exact increased amount as additional duties on imports," said Swart.
Holcim Philippines buys Lafarge Republic assets 06 August 2015
Philippines: Holcim Philippines Inc plans to expand its market and offer a wider range of construction solutions following its acquisition of Lafarge Republic Inc's Star terminal in Manila and its aggregates business in Rizal. Holcim Philippines president and CEO Eduardo Sahagun said that the purchase is a welcome addition to the company's business.
"These assets further strengthen our ability to provide products and solutions that help our customers and partners in the construction industry," said Sahagun. He said Lafarge's Star terminal would strengthen Holcim Philippines' ability to support customers in Metro Manila and South Luzon, while the acquisition of Lafarge Republic Aggregates Inc, located in Angono, Rizal, would provide the company an established aggregates business. Holcim Philippines closed the deal on 4 August 2015 and paid US$67.5m for the assets.
Shree Cement’s profit down by 63% 06 August 2015
India: Shree Cement's profit in the quarter that ended on 30 June 2015 fell by 62.5% year-on-year to US$16.3m, but its overall earnings beat expectations due to strong growth in its power business.
Its revenue grew by 4% to US$270m and its operating profit fell by 18.7% year-on-year to US$55.9m. Its results were affected by 8.2% higher power and fuel costs, 26% higher freight and forwarding expenses and a 55% depreciation cost. The cement business grew by 1.7% to US$238m, while its earnings before interest and taxes (EBIT) was a US$7.46m loss. Overall performance was supported by its power business, which contributes 23% to total revenue.
US/Japan: Taiheiyo Cement Corp has announced that its California subsidiary CalPortland Co will buy North Carolina-based Martin Marietta Materials Inc's cement business in California for US$420m. Taiheiyo Cement aims to complete the acquisition procedures by the end of September 2015. The acquisition will allow the company to recoup the cement production capacity lost by the discontinuation of output at CalPortland's plant in Colton, California and to establish a cement supply system to meet growing demand in California, Arizona and Nevada.
JSW Cement orders eight slag grinding units from KHD 06 August 2015
India: JSW Cement has ordered eight 90t/hr roller press slag grinding units from KHD Humboldt Wedag India Private Ltd (India) and KHD Humboldt Wedag GmbH (Germany) for its plants in India.
Consolidation in the African cement market 05 August 2015
A member of the Global Cement LinkedIn group recently posed a question about the relative sizes of LafargeHolcim and Nigeria's Dangote Cement in the African cement market. The correspondent wanted to get a handle on their relative sizes and how the situation would change as a result of the merger. Would Dangote lose its position as Africa's number one producer? If so, would its aggressive expansion allow it to regain its position at the number one spot?
As both one of the most rapidly-growing markets in the world for cement and the one with the most potential for future gains, Africa has been discussed in this column on many previous occasions. However, we have previously considered Africa's different regional markets, be it Dangote-dominated West Africa, North Africa, rapidly-growing East Africa or the far south, where PPC is looking to counter Dangote's growing strength.
However, the formation of LafargeHolcim and the news that HeidelbergCement will acquire Italcementi (starting with an immediate 45% stake), has massively consolidated the African market. In conjunction with Dangote's rapid development, these deals have transformed the African cement sector from one with a large number of small national and regional markets into a far more homogeneous entity. A number of key players, namely LafargeHolcim, Dangote Cement, HeidelbergCement and PPC, are present in numerous important markets all over the continent.
In answer to the aforementioned LinkedIn group member, the Global Cement Lafarge-Holcim Merger Report, states that LafargeHolcim controls 47.1Mt/yr of capacity in Africa. The new group is present in markets as diverse as Egypt, Morocco, Nigeria, South Africa and Zimbabwe. It is currently Africa's largest cement producer.
The second-largest producer at the moment is Dangote Cement, the only African-based large multinational cement producer. According to its website, it has 31.2Mt/yr of capacity currently active in Africa. The group is rapidly expanding. "We hope to commission four other cement plants in Senegal, South Africa, Cameroon and Tanzania before the end of 2015," said Aiko Dangote, Dangote Group President this week.
The new Dangote capacity that we can identify adds 4Mt/yr. This takes Dangote's total to 35.2Mt/yr. This is close to the 37.1Mt/yr of African capacity that LafargeHolcim actually owns, but Dangote is always planning its next move. Indeed this week it was rumoured to have been looking at purchasing Italcementi itself, hence HeidelbergCement's rapid movement.
In its press-release, HeidelbergCement suggests that the purchase of Italcementi will give it a position as strong as Dangote in the African market at around 30Mt/yr. It will add strong positions in Morocco and Egypt to its existing strengths on the West African coast. For its part, South Africa-based PPC currently has around 8Mt/yr of capacity in South Africa (4Mt/yr), Botswana, Zimbabwe and Ethiopia. It is currently installing capacity in the Democratic Republic of Congo and as far afield as Algeria, where it is involved in a joint venture with a local group.
Between them, these 'Big Four' share approximately 116Mt/yr of capacity in Africa. According to the Global Cement Directory 2015, this is just over half of Africa's 225Mt/yr of cement production capacity. This proportion will only increase as Dangote and PPC enlarge their presences.
The multinational players will likely not expand as rapidly, even in Africa. At the launch of LafargeHolcim, Group CEO Eric Olsen was pretty clear that the company does not plan any 'capital-intensive' expansions in the coming years. HeidelbergCement's future actions are less predictable, especially as we are yet to hear about any divestments that may be required from HeidelbergCement and Italcementi in order to satisfy competition authorities around the world.
Whatever happens in the future, it is clear that the African cement industry has undergone a significant transformation in the past few weeks. With per-capita cement consumption far lower than on other continents, there will be plenty of room for growth as well as for more acquisitions, divestments, mergers and expansion projects from the 'Big Four' and others in the coming years.
Dangote opens Masaiti, Zambia cement plant 05 August 2015
Zambia: Nigeria's Dangote Cement opened its US$400m cement plant in Masaiti, Zambia on 4 August 2015, signalling its increasingly international ambitions as it plans new investments across Africa. The plant is expected to produce 1.5Mt/yr of cement per year once it is fully operational, creating at least 1000 direct jobs and 6000 indirectly.
"We hope to commission four other cement plants in Senegal, South Africa, Cameroon and Tanzania before the end of 2015," said Aiko Dangote, Dangote Group president. "We have decided to invest in 16 countries across the continent because we believe that Africa's future is linked to cement."
Asia Cement’s first half 2015 revenue down by 23% 05 August 2015
China: Asia Cement said that its profit attributable to owners for the first half of 2015 plunged by 97.4% year-on-year to US$1.59m in the first half of 2015. The decrease in net profit was attributed primarily to the fall in average cement sales price. Its revenue fell by 23.1% to US$484m and its gross profit margin on revenue dropped to 14% from 24% in the same period of 2014. No interim dividend will be distributed.
India: Orient Cement has reported a 20% year-on-year decline in its net profit to US$4.37m for the first quarter of its 2016 fiscal year, which ended 30 June 2015, on the back of fall in revenues. Total income from operations decreased by 8.69% to US$54.8m. However, its earnings before interest, taxes, depreciation and amortisation (EBITDA) margin was stable at 17%, mainly due to lower raw material and power and fuel expenses. Orient Cement also announced that it has appointed Swapan Dasgupta as additional director in the category of Independent Director.